Brazil Announces Major Stimulus Plan To Boost Growth

8/15/2012 11:06 PM ET

The Brazilian government has unveiled a key stimulus package aimed at attracting as much as BRL 133 billion ($66 billion) in private investment into the country's infrastructure projects over the next 25 years.

The plan is seen as the first in a series of stimulus measures and primarily targets improvement in transportation facilities, particularly highways and railways.

As much as BRL 79.5 billion will be invested in the first five years. Further announcements, including investments in airports and ports are expected in the coming weeks, Transport Minister Paulo Passos said Wednesday.

Passos said that BRL 42 billion will be allotted for the development of highways and BRL 91 billion has been set aside for railways. The government will also offer subsidized loans for investors looking to get in on the projects.

The package is part of a huge stimulus package conceptualized by President Dilma Rousseff to jump start the economy, which has been slowing significantly over the past year.

Rousseff said Wednesday that the plan will make Brazil more competitive in the international market.

The economy expanded 7.5 percent in 2010, but growth slowed to 2.7 percent in 2011. Economists expect growth to be around 2 percent or less this year.

Economists surveyed by the central bank have ecently cut the their growth projection for the economy to 2.01 percent this year.

In July, the Banco Central do Brasil lowered the key interest rate for an eighth consecutive rate-setting session to support the flagging economic activity. The benchmark Selic rate was slashed by 50 basis points to a new record low of 8 percent.